In the workers’ compensation arena, there are many constantly changing mandatory Medicare requirements. EPS regularly prepares Medicare analyses, Workers’ Compensation Medicare Set-Asides (WCMSA), and CMS submittals for its clients and keeps abreast of the changes regarding Medicare as they occur. This article addresses some of the changes in this area. Please note that this is a constantly evolving area and current information should always be verified..

Whenever a person is injured at work, many obligations arise with regard to Medicare. Two of these obligations include 1) reporting injuries that involve Medicare beneficiaries, and 2) protecting Medicare’s interests when settling an injured worker’s right to future medical treatment. In light of a recent complaint filed by the federal government these obligations are even more important today. In USA v. Stricker, et. al., (E.D. N.D. Ala. 2009) (No. CV-09-PT-2423-E), the federal government is seeking to recoup conditional payments in a large class-action settlement, which involved Medicare beneficiaries. Importantly, instead of seeking to recoup the conditional payments from the Medicare beneficiaries, the federal government is seeking recovery from the defendants, which includes insurance companies. Although the case was filed in the civil arena, there is no indication that the federal government will not take similar action in a workers’ compensation case. This case sends the clear message that the above requirements must be met when either or both apply in a workers’ compensation case. These requirements are discussed in further detail below.


When there is a work-related injury or workers’ compensation occurrence which involves a Medicare beneficiary, that case must be reported to the Coordination of Benefits Contractor (COBC). Information regarding how to contact that COBC and the information required when reporting an injury to the COBC can be found on the CMS website.

Once the information is received, a rights and responsibility letter will issue to all parties informing them of the applicability of the Medicare Secondary Payor program and Medicare’s recovery rights. Subsequent to the issuance of this letter, a conditional payment letter will automatically issue. It is important that Proof of Representation and Consent to Release documentation be submitted in order to receive this letter. If these forms are not filed, then only the injured worker and workers’ compensation or no-fault carrier (if known) will receive the conditional payment letter. For cases reported after October 1, 2009, the conditional payment information will be updated every 90 days.

In cases in which Medicare has made any conditional payments, when the case is ultimately resolved, Medicare will recover those payments pursuant to 42 CFR 411.47 (which sets forth formulas for determining Medicare payments). And as in USA v. Stricker, the federal government may even pursue litigation to recover these payments. Therefore, when a case is settled or a decision is issued, those documents must be forwarded. Once they are a received, a Final Demand Letter will issue; if this amount is not paid within 60 days, interest will be assessed.[1]


Centers for Medicare and Medicaid Services (CMS) regulations mandate that any time a workers’ compensation defendant settles an injured worker’s case and future medical expenses are included in the settlement (e.g., resolution by Compromise and Release and/or Application for Approval of Agreed Settlement 908(i) which resolves the injured worker’s right to future medical care), the interests of Medicare must be considered. The common manner of protecting Medicare’s interests is by incorporating a WCMSA into the terms of the settlement. A WCMSA is not necessary when resolution of the workers’ compensation claim leaves the medical aspects of the claim open (e.g., resolution by way of Stipulations with Request for Award when there is a need for further medical care).
It is not in Medicare’s best interest to review every workers’ compensation settlement in which the injured worker’s right to future medical care is included in the settlement. Instead, a WCMSA must be submitted to CMS for approval in the following situations[2]:
1) The claimant is currently a Medicare beneficiary and the total settlement amount is greater than $25,000; or,
2) The claimant has a “reasonable expectation” of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.
A person has a “reasonable expectation” of Medicare enrollment if:
· The individual has applied for Social Security Disability Benefits;
· The individual has been denied Social Security Disability Benefits but anticipates appealing that decision;
· The individual is in the process of appealing and/or re-filing for Social Security Disability Benefits;
· The individual is 62 years and 6 months old (i.e., may be eligible for Medicare based upon his/her age within 30 months); or,
· The individual has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD.

Whether or not submission to CMS is required, an analysis can be undertaken with regard to the value of the injured worker’s future medical care costs. EPS regularly prepares WCMSA analyses. In addition to analyzing the costs of an injured worker’s future medical care, familiarity with individual cases and thorough knowledge of each file enables us to make recommendations, which in certain cases may allow the set-aside amount to be lowered. Some examples include obtaining a rated age[3] (thereby decreasing the injured worker’s life expectancy[4], and seeking clarification from medical providers as to the necessary treatment, including possible titration of medication.

When submission to CMS is required, there are both mandatory and optional documents to be submitted for initial approval of the set-aside amount. A sample list includes:
· A cover letter with party and other necessary information;
· A signed consent form;
· Medical records (including first report of injury, medical records of any major surgery, and records for the last two years of treatment);
· Payment history (showing indemnity, medical, and expenses paid);
· (Optional) Rated age(s) (all rated ages obtained must be included, as well as a statement stating that all rated ages obtained are included);
· (Optional) Administration agreement (discussed below);
· (Optional) Settlement documents (the settlement documents and approval must be submitted to CMS for final approval of the set-aside);

If submission to CMS is required, the WCMSA will need to be administered by a competent administrator (including the injured worker or a professional administrator). Allowing the injured worker to self-administer the set-aside (interest bearing) account will avoid the costs associated with utilizing a professional administrator. A Medicare Set-Aside Custodial Agreement that outlines the duties and responsibilities must be prepared, which includes instructions as to how the funds are to be spent and reporting requirements to CMS. Until the funds are exhausted from the set-aside amount, Medicare will not make any payments for any services related to the work injury. However, even when a WCMSA does not have to be submitted to CMS, if a settlement is resolving an injured worker’s right to future medical care, you still must consider Medicare’s interests when resolving the case.

In summation, the Medicare requirements must be followed in order to protect your entity and/or your client from future action by the federal government. If there are any questions regarding the foregoing or if you have a case in which these requirements apply for which you need assistance, please feel free to contact our office.

[1] The final amount can be challenged, but interest begins to accrue.
[2] It is important to note that the review thresholds are subject to adjustment at any time.
[3] When submitting a WCMSA to CMS when a rated age is being utilized, all rated ages obtained must be included and a statement advised that all rated ages obtained have been included must be contained within your submission packet to CMS.
[4] In 2008, CMS issued a memorandum advising that CMS will only accept life expectancies obtained from the CDC Table 1, “Life table for the total population.”